The fourth additional sessions court in Hyderabad on Wednesday posted the orders on the bail petition of Price Waterhouse auditors to Thursday.
PW auditors S Gopalakrishnan and Srinivas Talluri are in jail after they have been arrested in connection with the Rs 7,800 crore (Rs 78 billion) financial scam at the Satyam Computer Services [ Get Quote ] Limited. The arguments for the bail petition began on Tuesday and continued on Wednesday.
The CBI stressed that the PW auditors had conspired with Satyam founder B Ramalinga Raju [ Images ] [ Images ], his brother B Rama Raju and former chief financial officer Srinivas Vadlamani and certified the balance sheets and profit and loss statements and caused financial loss to small investors and shareholders. The auditors have grossly failed complying with standard auditing practices, which amounted to professional misconduct.
The PW auditors cannot plead ignorance to the fraud since they have signed the balance sheets. The auditors have failed to express their opinion as 'true and fair view' of the state of the financial affairs of the company despite having the entire material on their record. The balance sheets and the results of the company have been inflated for the last seven years but has seen a bulge in the inflating in 2007 and 2008, the CBI said.
The CBI, in their petition, has said the extended family members of Raju brothers have sold off their shares at opportune times when the share prices were high in 2006 in the phase I of the scam.
Later, to prevent the company being taken over by other entities, they continued to inflate the balance sheets and ran the company as it is was a proprietorship concern without any concern for corporate governance. Lastly, the core promoters pledged their shares to receive heavy sums of loans, which have been used for funding the front companies.
The PW auditors were responsible for verifying the actual fixed deposits held by the company but had deliberately not done the same.
The CBI said the Rs 1,425 crore (Rs 14.25 billion) brought into the company was shown as sale proceeds and records were fabricated to show that this money was transferred from Bank of Baroda [ Get Quote ], New York branch. The cash books of the banks were fabricated by the PW auditors with Satyam. Apart from not verifying the bank balances directly, they did not verify the IT returns for the purpose of TDS and did not verify the sales lest the fake invoices would have been detected.
Meanwhile, the counsel for Raju brothers and Vadlamani sought time till April 13 for their bail pleas. The petition filed by the Enforcement Directorate seeking the court's permission to question the accused in the Satyam case has been posted to April 13.
Raju brothers and the former chief financial officer would be produced before the court tomorrow morning for taking specimen signatures and handwriting samples. The CBI has filed a petition for signature and handwriting samples as it felt several documents have been fabricated. Also, the court would give its order on the CBI request for a lie detection test on Raju and aides on Thursday.